Booker Group Plc RNS
30 May 2012
Proposal for Booker Group to acquire Metro UK
Booker Group Plc (“Booker”), a leading UK food wholesaler, and Metro Group AG
(“Metro”), the German retail and wholesale group, are pleased to announce that they
have entered into an agreement for Booker to acquire Makro UK (“Makro UK”), Metro’s
wholesale business in the UK, in exchange for new Booker Shares, representing 9.99 per
cent of the current issued share capital of Booker and a cash consideration of
£15.8 million.
Based on the closing price on 29 May 2012, being the last practicable date prior to this
announcement, of a Booker share of 79.1p, the value of the New Ordinary shares to be
issued is £123.9 million which, combined with the cash sum of £15.8 million, values
Makro UK at £139.7 million.
Through this Proposed Transaction Booker is seeking to become the UK’s leading
wholesaler to caterers, retailers and small and medium sized enterprises, with a wide
range of food and non-food via the internet, delivery and cash and carry. The
combination of the two businesses will enable Booker and Makro UK to further improve
choice, prices and service for all customers. The Proposed Transaction includes Makro
UK’s network of 30 purpose built sites which serve more than 1m customers, largely
small and medium-sized enterprises – a customer base that complements Booker’s focus
on catering and retail customers.
Booker and Metro have agreed to enter into a strategic partnership agreement which will
enable competence sharing for mutual benefit. Metro will become a significant
shareholder in Booker, and there is an agreement to enter into a relationship agreement
regarding its shareholding.
Charles Wilson, Chief Executive of Booker, said:
“Through working together, Booker and Makro UK will improve choice, prices and service
for retailers, caterers and SMEs throughout the UK. Together we will offer a wide range
of foods and non-foods to our professional customers, via the internet, delivery and cash
and carry. The Board is confident that this collaboration will enable us to continue to
generate value for shareholders.”
Olaf Koch, Chairman of the Management Board of Metro Group, said:
“In Booker, we have found the right buyer for our challenging UK business, which has
shown an unsatisfying performance. Booker is very well positioned in the UK market,
with a great brand perception and vast experience in managing product ranges and in
customer services. Therefore we are convinced that this new setup meets all
requirements for future success in the UK, while allowing Metro Group to further
concentrate on countries within our strategic focus.”
Next steps:
Makro UK is of sufficient size relative to Booker to constitute a Class 1 transaction under
the Listing Rules and the Proposed Transaction is, therefore, conditional upon the
approval of Shareholders.
Further details of the Proposed Transaction, together with a notice convening a General
Meeting to approve the Transaction, will be contained in a circular due to be sent to
shareholders on or around 15 June 2012. The circular will include a recommendation
from the Board of Booker that shareholders vote in favour of the transaction. All
documentation relating to the Proposed Transaction will be on the Booker Group
website: www.Bookergroup.com/investor-centre
For further information contact:
Tulchan Communications (PR Adviser to Booker Group Plc)
020 7353 4200
Susanna Voyle
A teleconference presentation for analysts will be held at 8.30am on Wednesday 30 May.
For further details please call Sandra Cameron at Tulchan Communications on 020 7353
4200. The presentation for analysts can be found on the Booker Group website:
www.Bookergroup.com/investor-centre
Headline principal terms of the Proposed Transaction:
-
Booker will acquire Makro UK, including 30 purpose built sites;
-
The consideration for the Acquisition comprises the issue by Booker to the
Seller of 156,621,525 New Ordinary Shares and the payment by Booker to
the Seller of £15,800,000 in cash;
-
Makro UK will be acquired on a “debt free/cash free basis” with normalised
working capital. The amount of the consideration will be adjusted for any
debt or cash balances and if the actual working capital balance shown by
completion accounts exceeds or falls short of the normalised level of working
capital as agreed between the parties
-
Closing is conditional, inter alia, on the approval of the Proposed Transaction
by Booker’s Shareholders and the approval by the supervisory board of
Metro; Booker will notify the acquisition to the Office of Fair Trading; the
Proposed Transaction is not conditional on clearance from the competition
authorites
-
Booker and Metro have agreed to enter into a strategic partnership
agreement to facilitate competence sharing between the two groups
-
Booker and Metro have also agreed to enter into a relationship agreement
containing provisions relating to Metro’s shareholding in Booker under which
Metro has agreed to not sell any shares, subject to some specific carve-outs,
for a minimum of 12 months from the date regulatory clearance for the
Proposed Transaction is obtained
The detailed terms of the transaction will be set out in the circular to shareholders.
Together, Booker and Makro UK will be seeking to improve choice, prices and
service for customers:
Choice: A typical Booker branch carries 8,500 stock keeping units and a typical Makro
UK branch sells 29,000 stock keeping units. Booker intends to make part of Makro UK’s
product ranges available throughout the UK, either in its branches or via the internet.
In addition, it is intended that Booker’s speciality catering ranges will continue to be
supplied by its Ritter subsidiary and on-trade ranges will be supplied by its Classic
subsidiary. Together, Makro UK and Booker should offer an improved professional range
for caterers, retailers and professional businesses throughout the UK.
Prices: Booker has a range of private label brands that offer good value for money,
including: Chef’s Larder, Booker Basics, Farm Fresh and Euroshopper which are expected
to be made available to Makro UK’s customers. It is intended that some of Makro UK’s
ranges will be made available to Booker customers.
Service: Booker has strong internet capabilities and intends to use these to develop
business services for Makro UK’s customers throughout the UK. Booker expects to
improve the delivery service for customers by utilising Booker’s and Makro UK’s sites.
Through pooling stock, availability for customers should also be improved.
Overall: It is expected that Booker’s and Makro UK’s customers will benefit from better
choice, prices and service via the internet, delivery or cash and carry.
Booker and Makro UK have complementary customer bases
Booker primarily serves caterers and retailers and Makro UK primarily serves small and
medium sized enterprises (SMEs). Together, it is anticipated that Booker and Makro UK
will seek to improve choice, prices and service for customers throughout the UK.
Customers (000’s)
Sales (£bn)
Total
2.8
1.4
0.5
4.7
Booker
Makro UK
Booker
Retailers/Traders
Caterers/Horeca
Other SMEs
83
338
60
39
129
963
2.6
1.2
0.1
Makro
UK
0.2
0.2
0.4
Total
481
1,131
3.9
0.8
Source: Booker and Makro UK
The figures for Booker are for the year to 30 March 2012; the figures for Makro UK are for the year to 31
December 2011; the figures are unaudited
Directors, management and employees of Makro UK
Booker employs more than 10,000 colleagues and Makro UK 3,000 employees. Booker
attaches importance to the skills and experience of the management and employees of
Makro UK.
Improving service for suppliers:
Booker and Makro UK will provide a growing route to market for suppliers, with low
financial risk. Supply chain efficiency should improve and carbon emissions should be
reduced. The Enlarged Group will be able to sell a wider range of products to SME
customers. At a time when multiple retailers are increasingly targeting SME customers,
the combination of Makro UK and Booker should provide suppliers with a high service
route to market.
Information on Booker, Metro AG and Makro UK:
Booker
Booker Group is a leading UK food wholesaler with sales for the year ended 31 March
2012 of £3.9 billion. Booker operates from 172 branches in the UK with a typical branch
selling 8,500 stock keeping units. Booker’s customer base includes 338,000 caterers,
83,000 independent retailers and 60,000 other customers. Of the £3.9 billion sales, £1.1
billion is delivered to customers’ premises (27% of sales), including £635m on the
internet (16% of sales) and £2.8 billion is collected by customers from Booker’s
branches. Since 2005/06 Booker has been focusing, driving and broadening the Group to
become the UK’s leading supplier to caterers and retailers. Through improving choice,
prices and service, Booker has increased customer numbers by 75,000 since 2007/08
and grown sales by £800 million. In recent years Booker has successfully acquired
Blueheath, Classic and Ritter to improve customer satisfaction and deliver shareholder
value.
Metro AG
Metro AG is the world’s fourth largest retailer by revenue. Makro UK is part of the Metro
AG Cash & Carry Division which is an international self-service wholesaler with sales of
over €30 billion in 2011 and approximately 700 locations across 30 countries.
Makro UK
Makro UK began trading in the UK in May 1971 at Eccles in Manchester. Makro UK
includes a network of 30 purpose built sites, which it owns or holds on long leasehold.
Makro UK serves a broad customer base. Makro UK has been underperforming in the
past few years. For the year ended 31 December 2011 Makro UK had gross assets of
£348.7 million and made a loss before taxation of £63.2 million. The trading results for
Makro UK for the three years ended 31 December 2011 were as follows:
Year ended 31 December
Revenues
- tobacco
- non tobacco
Reported Loss before tax
Net financing costs
Reported operating loss
2009
2010
2011
£’m
£’m
£’m
114.6
782.8
897.4
116.9
701.1
818.0
109.5
677.9
787.4
(35.6)
7.4
(28.2)
(12.5)
4.6
(7.9)
(63.2)
3.4
(59.8)
Depreciation and amortisation
12.5
12.8
13.6
Impairment
Pension credits
6.4
(0.1)
(12.7)
17.8
(4.3)
15.3
2.9
26.7
5.9
(4.9)
(6.0)
413.4
421.5
348.7
Other significant items
Operating
profit/(loss)
before
pension
credits,
depreciation,
amortisation and
other significant items
Gross assets
The financial information set out above is unaudited; audited financial information for Makro UK will be
published in the circular to be sent to shareholders
On acquisition, Booker will consider the fair value of all assets and liabilities and will align accounting policies
Effects of the Acquisition on Booker Group:
The Board believes that, taking into account Makro UK’s historic levels of operating
losses and the increased number of shares in issue following Admission, the Proposed
Transaction will be earnings dilutive in the year ending 29 March 2013. Assuming the
benefits of serving a wider customer base with a wider range of products are achieved,
the Proposed Transaction is anticipated to be earnings enhancing in the first full year
after integration. This statement is not meant or intended to be a profit forecast, and
should not be interpreted to mean that the earnings per share of Booker following the
Acquisition will necessarily be above or below the historical published earnings per share.
Current trading and prospects:
Booker:
Booker’s preliminary results for the year ended 30 March 2012 were announced on 24
May 2012 and contained the following statement in relation to the outlook for the Group:
“The economy is expected to remain challenging in the year ahead and the food
wholesale market remains very competitive. Nevertheless, we expect to continue to
make progress in this difficult environment. Booker has made a good start to the current
financial year, even compared to the very strong performance in the first seven weeks of
last year and, in spite of the fact that tobacco sales have been slow, we remain on
course to meet our expectations for the year.”
There has been no change in the performance or outlook of the Group since 24 May
2012.
Makro UK:
While the trading environment is expected to remain challenging in 2012, Makro UK has
ambitious plans to accelerate its business turnaround. Makro UK has had a good start to
the current financial year, and year-to-date Makro UK is performing in line with its
business plan.
Admission to trading and dealing arrangements:
An application will be made to the UKLA and to the London Stock Exchange for the New
Ordinary Shares to be admitted to the Official List and to trading on the London Stock
Exchange’s main market for listed securities. The New Ordinary Shares, when issued,
will rank pari passu with the existing Ordinary Shares in issue at that date.
Recommendation:
The Board is of the opinion that the Proposed Transaction is in the best interests of the
Company and shareholders as a whole. Accordingly, the Board intends to unanimously
recommend that shareholders vote in favour of the Resolution to be proposed at the
General Meeting.
Definitions:
The following definitions apply throughout this announcement unless otherwise stated or
the context requires otherwise:
Acquisition
The proposed acquisition of Makro UK by Booker;
Acquisition
Agreement
the agreement relating to the Acquisition;
Booker or Company
Booker Group Plc, a public company limited by shares
incorporated under the laws of England and Wales with
company registration number 05145685 and having its
registered office at Equity House, Irthlingborough Road,
Wellingborough, Northants NN8 1LT;
Board
the board of directors of Booker;
Closing or
Completion
the completion of the Acquisition in accordance with the terms
of the Acquisition Agreement;
Directors
the members of the board of directors of Booker;
Enlarged Group
Booker and its subsidiaries, including Makro UK;
General Meeting
the general meeting of the Company, details of which will be
given in the circular;
Group
Booker and its subsidiaries, excluding Makro UK;
London Stock
Exchange
London Stock Exchange plc;
Makro UK
Makro UK comprises Makro Self Service Wholesalers Limited,
the operating business of Makro UK, two holding companies
(Makro Holding Limited and Makro Properties Limited), as well
as four properties which are used by Makro Self Service
Wholesalers Limited that are held within a separate entity and
will be transferred into Makro Properties Limited;
Metro
Metro Group AG, a public company limited by shares
incorporated under the laws of Germany with company
registration number HRB 39473 and having its registered office
at Schlueterstrasse 1, 40235 Duesseldorf;
New Ordinary
Shares
the 156,621,525 new Ordinary Shares to be issued pursuant to
the Acquisition Agreement as part consideration for the
Acquisition;
Official List
the official list of the FSA;
Ordinary Shares
ordinary shares of 1 pence each in the capital of the Company;
Proposed
Transaction
the transactions contemplated by the Proposed Transaction
Documents;
Proposed
Transaction
Documents
the Acquisition Agreement, the Strategic Partnership
Agreement,
the Relationship Agreement, the Transitional Services
Agreement,
the Trade Mark Licence and any other documents in the Agreed
Form, further details of which will be given in the circular;
SME
Small and medium sized enterprises.